Yes, the parents get the tax break for all the kids. The court decided that what matters is the legal *right* to get the money, not whether the kids were *likely* to actually ask for it. The court said it would be unfair for the IRS to just guess who might ask for the money. Even though the younger kids were minors, they still had a legal way to get the money. If they demanded it, the trustee (the person managing the trust) would have to go to court, have a guardian appointed, and then give the money to the guardian for the child. Because this legal path existed, the gift was considered 'present,' and the tax break was allowed for everyone.

Yes, the money put in the trust counts as a gift the kids get now, even for the younger ones. We think what's important is that the kids have the right to ask for the money, even if they probably won't. It doesn't matter if it might be hard for them to actually get the money or if they don't know they can ask for it. What matters is that if they did ask, the person in charge of the trust would have to give them the money. So, the parents don't have to pay as much tax on the money they put in the trust for any of their kids, even the young ones.

Yes, a minor beneficiary's unexercised right to demand a distribution from a trust creates a gift of a present interest. The court found that the crucial factor is the legal right to enjoy the property, not the likelihood of its actual enjoyment. The court rejected the test that examines the surrounding circumstances to determine if present enjoyment is likely (the Stifel test), finding it inconsistent and arbitrary. Instead, it adopted a test focused on whether the beneficiary is legally and technically capable of demanding the property (the Perkins or 'right to enjoy' test). Under California law, a minor could make such a demand; if a demand were made, the trustee would be legally obligated to petition the court for a guardian to receive the funds. The practical difficulties of a minor making a demand or the fact that a demand was unlikely did not negate the existence of the legal right, which is sufficient to establish a present interest for the purposes of the gift tax exclusion.

Yes, the gifts to the trust qualify as present interests for all beneficiaries, including minors. We reject the strict interpretation of Stifel v. Commissioner, which would examine the likelihood of present enjoyment. Instead, we focus on the legal right to demand and potentially receive property, as stipulated in the trust. The trust's demand provision allows a minor or their guardian to demand up to $4,000 or the amount transferred within the year, which should be payable immediately. This satisfies the requirements for a present interest under tax law. We conclude that as a technical matter, a minor could make the demand, even if it is unlikely to occur in practice. The practical difficulties or unlikelihood of a demand being made do not negate the present interest nature of the gift. We follow the reasoning in Perkins and the 'right to enjoy' test from Gilmore, which focus on whether the demand could be legally resisted. In this case, the trustee would have no choice but to appoint a guardian and distribute the demanded funds. Therefore, all claimed exclusions for both years should be allowed, including those for the minor beneficiaries David and Mark.

D. Clifford Crummey v. Commissioner of Internal Revenue

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